BBA seeks extra time, cost hike for support project

Dhaka,  Fri,  09 December 2016
Published : 23 Nov 2016, 00:21:32 | Updated : 23 Nov 2016, 09:48:00
No progress in main DEE project

BBA seeks extra time, cost hike for support project

FHM Humayan Kabir
The Bangladesh Bridge Authority (BBA) has sought four more years and 53 per cent cost hike for a project that supports the proposed Dhaka Elevated Expressway (DEE).

But implementation of the DEE is yet to start even five years after striking a deal with a Thailand-based company.

Officials said the BBA came up with the plea for such time and cost overruns only for doing the spadework for the much-talked-about expressway in the capital.  

BBA and Ital-Thai Development PLC signed a US$1.2 billion agreement in January 2011 for construction of the elevated expressway under public- private partnership (PPP) arrangement. But the company has yet to begin the main work, they said.

One official said Ital-Thai has failed even to mobilise necessary funds for building the 20-kilometre Airport-Kuthubkhali expressway.

"Although the Ital-Thai has failed to start construction of the DEE even after five years of the agreement, why the government is going to invest 53 per cent more funds for its equity?" questioned the official, requesting anonymity.

The BBA recently revised the 'Support to DEE project' and sent it to the Planning Commission (PC) for approval.

The state-owned bridge builder has sought revision of the project by way of enhancing the cost to Tk 48.85 billion from the estimated Tk 32 billon and time extension by four years to December 2020 from the December 2016 deadline.

It's only a supporting one to the main expressway-construction project as it is designed for shifting underground and overhead utility service lines, land acquisition, and some other spadework. Banking on support from this project, the selected Ital-Thai PLC would build the DEE smoothly.

The BBA official said: "We have been forced to revise it as the land- acquisition cost for the DEE project has gone up over the years. It alone will require Tk 18.29 billion extra than the current allocation for the project."

 He said they would have to acquire some lands where there are many multistoried buildings and establishments situated.

According to BBA, the land acquisition for the first tranche (6.67 acres) is completed while the 2nd and 3rd phases are ongoing in the run-up to building the elevated expressway for transports to leapfrog nagging traffic congestion in the capital.

The construction yard for the expressway has been prepared and other preparatory works are also on steam.

Meanwhile, the Ital-Thai PLC missed the October deadline once again for submission of financial report as per the contract.

BBA had announced earlier that the building of the 20-km expressway will kick-start in August. It, however, had given the concessionaire a new deadline until October for submission of financial closure to start counting 25-year concessional period.

According to terms of contract, the Italian-Thai will have to submit the financial report, known as financial closure, to start the project and enjoy 25 years of payback period. After the concessional period, the government will take over the expressway's ownership.

The PPP contractor has sought nine months more to submit its financial closure, as there is a provision in the PPP agreement, said another BBA official.

The financial closure is required to commence full-scale construction work on the expressway by informing the government about the source of funds.

BBA and Ital-Thai signed the first agreement in January 2011 and a second one in December 2013 for building the expressway as its design was changed significantly.

A senior PC official said since the selected company, Ital-Thai, is failing to start the main work on the expressway, the cost of project for supporting the DEE is also going up. "The government should take a prompt action to complete the work."

According to the agreement, 21 per cent of the US$ 1.2 billion-worth project will come from equity, 27 per cent from vulnerable group feeding (VGF), and the rest of the funds from other sources.

VGF money will be provided by the government on completion of the first-phase work from Hazrat Shahjalal International Airport to Mahakhali.

kabirhumayan10@gmail.com
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